6 Absurd Excuses Conservatives Make to Protect Greedy Oil Giants from Paying Their Taxes

It’s not pretty when several irrational ideas collide. On Thursday May 12, the Senate conducted a hearing to discuss the removal of a $2 billion per year tax break for the top 5 oil companies. The NYT called the testimony at the hearing “A big whine for big oil.” Eliminating a tax break like this should be a no-brainer, but that idea is blocked by six irrational notions from the right that come together in an explosion of false logic:

1. Speaker Boehner claims that “unsustainable debt and deficits threaten the prosperity of our children and the health and retirement security of our seniors”, BUT YET…

2. Stopping a tax increase, no matter what kind of tax, is economic priority number one. Senator Orrin hatch (R-UT) said that “all this hearing is about is providing a justification for tax increases.”

3. The conservative media pundits argue that an increase in taxes paid by the hugely profitable oil companies would raise the price of oil. SO…

4. For many conservatives, the answer to our oil problem is “drill, baby, drill,” the implication being that drilling for more oil within the US would lead to lower gas prices. THEREFORE…

5. If we drill for more oil, we’ll find oceans of it! The right-wing pundits say that we have enough oil to live happily ever after. If you need more of something, it will magically appear. AND FINALLY…

6. If we don’t get oil prices down, civilization will collapse because civilization is not possible without oil.

Let’s give these ideas a reality check.

First, as many at the Roosevelt Institute have argued, fiscal deficits are not the biggest problem we face right now. Our priority ought to be digging ourselves out of the hole that the global financial industry has placed us in. Many countries currently have deficits much bigger than ours, and the US has had much bigger ones in its history. And in any case, the way to address a huge deficit is to follow smart fiscal policies that focus on reigniting the economic growth engine that then creates enough jobs to provide the revenues the government needs. Sort of like what FDR did in the Depression.

That leads us to irrational idea number two: that you can’t raise taxes for anybody, especially not Big Business and billionaires. In reality, one way to reignite economic growth is to take economic resources from those who have them and aren’t using them particularly wisely — like the oil companies, financial industry, and wealthy top one percent of the population — and use them to invest in things that rebuild the economy, such infrastructure, a decent school system, or a manufacturing economy. Tax increases are a very bad thing in a recession for the bottom 90 percent or so of the population because they would dampen spending, which makes economic activity decline even further. But as Keynes showed in his classic book on  “General Theory,” the rich don’t tend to spend as much of their money as the rest of us (their marginal rate of consumption is lower), and their lack of spending makes things worse in an economic downturn. So tax increases for the top of the economic pyramid is a good idea.

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Which leads us to the wacky world of oil. The notion that denying an oil company a few billion in profits would lead to a rise in prices is demonstrably wrong, as the Congressional Research Service has proven. But worse is the idea that drilling for a few billion more barrels in the United States’ already depleted oil zones would have much of an effect on prices. If you manage to increase the amount of oil produced in the US, most of that oil will actually go to other countries because the oil market is global. The US uses about 21 percent of the world’s oil supply and produces about 8 percent. This means that we can’t buy our oil in some fantasy America-only market. (See figures from the BP Energy Review.) In fact, if you want to increase the supply of oil, you might want to, say, help the Iraqis fix their oil infrastructure (alas, we’ve already wasted hundreds of billions on a war over there). Bottom line: the US has become a small player on the global oil scene because it has already used up most of its oil — it only has about 2 percent of the world’s proven reserves.